Professor to sort Bank Referral Scheme

The much-vaunted Bank Referral Scheme master-minded by the Treasury went live on November 1 last year, followed by deafening silence ever since. Anecdotal stories have been trickling out that suggest the scheme is not working quite as well as everyone had hoped – tales of inconsistency in how leads are referred and remunerated are just two examples.

In response to our request for an update, a Treasury spokesman responded with the following:

The Finance Platforms policy is in its early stages of implementation. However, we are pleased with the initial implementation, and have already seen many small businesses gaining finance through the scheme.

Designated banks are obliged to offer referrals to small businesses they decline for finance. However, each bank will have its own process for offering referrals and Professor Russel Griggs has agreed to assess, and suggest improvements to, the referral processes of each of the designated banks. Professor Griggs is currently the Independent Appeals Reviewer for the lending appeals process, and is a respected expert in this area.

We expect Professor Griggs’ assessment of designated bank processes to assist the designated banks in maximising their referral volumes, ensuring the scheme is helping as many small businesses as possible.

Obviously at pains to show that the system is working, The Treasury even provided the case study of one happy beneficiary: Douglas Younger, the owner and Managing Director of Fork Truck Borders Instruction, based in Berwick-on-Tweed, in Northumberland. As the name implies, the company provides operator training for drivers of fork lift trucks, cherry pickers, scissor lifts, dump trucks, cranes and excavators.

We spoke to Mr Younger who confirmed that, having been turned down for an overdraft facility from his own Bank, Santander, he had been directed to Funding Options, which in turn referred him on to Iwoca which agreed a revolving credit facility – the process took 24 hours. Since securing the finance, the company has bought an additional forklift truck and employed a new instructor to expand the business.

The experience has clearly left Mr Younger holding some strong views. “I couldn’t understand it – I had seven years of running my business account with the bank and I had never borrowed a penny. But when I wanted to look to the future and needed some help I got nowhere”, he said. “Santander advertise themselves as offering business banking, but I couldn’t even get to speak to a business adviser. I was very disappointed.”

“By not giving small businesses their support, the banks are holding back British Industry. What chance does a small company have if they can’t get any help?”, added Mr Younger.

Finding the flaws in the Bank Referral Scheme is easy, but the motives behind its creation remain sound. There were always going to be teething problems and it was always going to take time to iron out the bugs and gain momentum. We don’t have any significant statistics to chew over yet, but if the Scheme produces more people like Mr Younger, who has clearly seen the benefits, then perhaps we should all be a little more patient.